One in five (19%) high-net-worth parents with children at private school have made significant changes to their education plans as a direct result of VAT on school fees, says Saltus.
The wealth manager surveyed 1,293 private school parents as part of a wider study of 2,000 people with investible assets of £250,000 or more.
It discovered that the introduction of VAT on fees has continued to place significant financial strain on families.
Six months ago, when VAT had just become payable, Saltus data found a third (32%) of HNW parents were planning to remove their child from their current school as a result of the fees.
While half of those planned to continue with private education by either sending them to a less expensive private school or a private school abroad, the other half planned to remove them from the system altogether, by sending them to state school or choosing to home school.
According to the latest Saltus Wealth Index Report, the intentions expressed at the start of the year are now coming into fruition, with almost a fifth (18.7%) of HNW parents removing their child from their private school.
Among this cohort, 5.4% have chosen to send their child to state school, while 2.3% have opted to home school. The rest have kept their child in private education either by moving their child to an alternative school (8.8%) or to attend private school abroad (2.3%).
Additionally, 6% say they have moved their child from boarding to becoming a day pupil at the same school to cover the rise in fees, while 5% have had to ask for financial support from family members.
Looking ahead, Saltus said one in four HNW parents who have not yet made any changes plan to do so in the future, with 20% intending to move their child to a different school and 3% planning on switching from boarding to day status at their existing school.
The report found many HNW families are having to make sacrifices to cope with the higher fees. More than seven in 10 (71%) say they already have or will have to make specific lifestyle or financial changes to cover the extra cost, such as cutting back on holidays and other big ticket expenses.
One in six (16%) have had to turn to others for financial help, while 10% have had to remortgage and 11% have taken out a loan. A similar proportion of parents (12%) have had to downsize or move to a more affordable area (11%). Others have rearranged their finances, with one in four either reducing pension contributions (17%) or dipping into their pension (8%).
Alex Pugh, chartered financial planner at Saltus, said: “We are now seeing the impact of VAT being added to school fees move from intention to reality.
“What’s particularly striking is that parents are not only switching to less expensive schools, but many are leaving the UK private system altogether, either moving children into state schools, sending them abroad or home schooling. Alongside this, large numbers of families are making significant financial sacrifices – from cutting back on spending to remortgaging homes, reducing pension contributions or even taking on additional work – to cover the higher costs.
“These choices are not limited to those under the most financial strain. Even parents who could, in theory, absorb the increase are reassessing the long-term value of private education and weighing it against other priorities such as retirement planning and supporting wider family needs. For families with more than one child, we are seeing parents carefully reconsider whether they can justify private schooling for younger siblings in the new environment. The effect of this policy is proving both immediate and far-reaching.”
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